Your Very First Property
HDB or Condo? What Is Suitable And How To Afford It?
If you’re getting your very own first home soon, here are some pieces of good advices for you!
Nick addresses which type of property nest suits you and how you can afford it. These are a few pointers to look into:
– Should I be looking at a HDB or Condo? New launch or Resale?
– What are the 3 Important Factors to consider your housing purchase suitability?
Three Factors To Consider
The first factor is affordability.
Your income and Loan-to-value (LTV) ratio matters because this shall translate to how much money you can borrow from the bank.
For example, if LTV ratio is 75%, you can borrow up to 75% of the property value. The remaining 20% can be paid through a combination of cash or your CPF OA, but an absolute minimum of 5% must be paid in cash.
With bank loan, you could borrow a maximum of $525,000 for a property value of $700,000 (75% of $700,000).
You can then use up to $140,000 of your CPF OA (20% of $700,000) to finance the purchase,
but the remaining amount of 5% will have to be paid in cash.
For HDB Concessionary Loans, the maximum LTV is 90%. The remaining 10% can be paid through cash and / or your CPF Ordinary Account (CPF OA).
Example, you could borrow a maximum of $630,000 for your purchase (90% of $700,000). Up to $70,000 (10% of $700,000) can be paid through cash or your CPF OA.
Second factor is eligibility.
We got to understand if you are eligible for any grants, be it your family grants or your enhanced CPF grants, or even the proximity grant.
Eligibility has to do with your citizenship, your ownership status and your income ceiling. For citizenship, Singaporean citizens are entitled to buy BTO from HDB and landed that is different from the rest.
Permanent Residents (PR) is only entitled to buy private condominiums and strata landed strata titled landed houses with the condominium status in the title deed. Similarly foreigners can only buy private residential, such as condominiums or strata landed houses with the title of condominium in the title deeds.
If you would like a comprehensive detail on eligible grants in Year 2021, check out this link.
Finally, the last factor is your needs.
We want to consider your investment objectives so is the property supposed to make money for you via capital appreciation or just for savings?
Are you also going to look at rental yield as a possible factor?
How much in terms of monthly installments is comfortable for you and over how long a period of time?
We usually advise our clients and to deep dive into the detail before customizing a solution that is right for you and your family’s lifestyle.
If you have any property questions, feel free to give Nick a call and he’ll be happy to answer.